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Why are Corporate Formalities Important?
What does this mean? The most common corporate formalities are Annual reports Records and minutes of annual meetings Records of votings, meetings...
“Corporate formalities” and “LLC” don’t seem like they should be in the same sentence. Isn’t that one of the perks of creating an LLC? So you don’t have to do those?
If you’re a single-member LLC in particular, it doesn’t matter too much (except you definitely should keep business and personal finances separate even if single-member-- we discuss this next).
Every business should keep its finances and accounting separate from its personal accounts. Mixing your personal transactions with your business ones makes it easier for plaintiffs to sue you personally, in the event you actually get sued. It’s part of a concept called “Piercing the Corporate Veil.”
To “pierce the corporate veil” basically means that if your company runs into legal trouble with another party and can’t pay a debt or judgment, the party suing you can “pierce your corporate veil” and pursue your personal assets.
So, here are some easy ways to actually keep your finances separate:
You can also use LLC Resolutions to memorialize important business decisions. If you make a decision with your partner that, per your operating agreement, would require a "vote," then open a Word or Google Doc, or use our template, and put this information in it: On the resolution you should include:
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What does this mean? The most common corporate formalities are Annual reports Records and minutes of annual meetings Records of votings, meetings...
2 min read
What does this mean? “D/B/A” stands for “doing business as.” It’s also commonly called a fictitious business name. It means that if your company --...
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What are the minutes of an LLC meeting? They are effectively a summary of the important meetings you have in your LLC. At the initial meeting after...